EUROPE LONG STEEL WRAP: No bright future for rebar prices after decline in May

Rebar prices in Europe have been under downward pressure from subdued demand and the situation is unlikely to change for better anytime soon.

Export rebar prices dropped by €35-40 ($39-45) per tonne during May.

Metal Bulletin’s weekly price assessment for Southern European rebar exports was €380-390 ($426-437) per tonne fob main ports on May 31.

Italian exporters have been looking for new markets to sell rebar to with the key Algerian markets still closed. Most recently, Canada and the US became targets.

Algeria has been a key market for finished long steel products from Southern Europe with imports of 2.60 million tonnes in 2016, but it has not yet announced import quotas or issued import licences for 2017.

And business activity slowed down further with the start of the Islamic fasting month of Ramadan last weekend. In longer term perspective, the Algerian market will hardly provide sufficient demand for the EU-origin rebar, as the North African country is adding to its own long steel production.

Meanwhile, Canada imposed anti-dumping duties on rebar from Belarus, Hong Kong, Japan, Portugal, Spain and Taiwan, as well as from China, Turkey and South Korea, providing Italy with an advantage. And the US Commerce Department set final anti-dumping margins on rebar imports from Turkey and Japan.

Domestic prices have been affected by the lack of export demand as well. Rebar prices across the EU declined by €10-25 ($11-28) per tonne over the period.

Metal Bulletin’s weekly rebar price assessments stood at €375-410 ($420-459) per tonne delivered in Southern Europe – Italy and Spain primarily – and at €450-460 ($504-515) per tonne delivered in Northern Europe on May 31. Most recently, sources reported prices of €435-445 ($487-498) per tonne delivered in Germany and the Netherlands.

“Some of the producers lost their nerve,” one market participant said.

“Prices are under pressure because of terrible overcapacity in South of Europe, [as they lost the Algerian market]. Southern European producers have no other choice than to dump rebar and end-products [to the EU domestic markets],” another source said.

“Italian producers [of rebar] will decrease output by as much as 30% if there are no changes in export sales volumes,” another source said.

No confirmation of planned production cuts has been received by Metal Bulletin at the time of publication, however.

Wire rod prices have been steadier amid better demand within Europe. Exports outside the union have been rare lately, according to market participants.

The gap between export prices for mesh-quality wire rod and for rebar from Southern European reached €40 ($45) per tonne by the end of May, while both products had been priced at €415-430 ($465-482) per tonne fob at the start of the month.

Lack of buying activity in the finished steel products market has also had a negative effect on the European domestic scrap prices.

In Italy, scrap prices declined by €5-20 ($6-22) per tonne month-on-month in May.

In Germany, scrap prices dropped by €5-15 ($6-17) per tonne over the past month.